Montgomery & Co., a well-established law firm, provided 500 hours of its time to Fink Corporation in exchange for 1,000 shares of Fink's $5 par common stock. Montgomery's usual billing rate is $700 per hour, and Fink's stock has a book value of $250 per share. By what amount will Fink's paid-in capital-excess of par increase for this transaction?

A) $345,000

B) $295,000

C) $350,000

D) $300,000

Question

Addyson Henderson

Business

5 March, 10:27

Montgomery & Co., a well-established law firm, provided 500 hours of its time to Fink Corporation in exchange for 1,000 shares of Fink's $5 par common stock. Montgomery's usual billing rate is $700 per hour, and Fink's stock has a book value of $250 per share. By what amount will Fink's paid-in capital-excess of par increase for this transaction?

A) $345,000

B) $295,000

C) $350,000

D) $300,000

+4

Answers (1)

Know the Answer?

Tony Lawson · Answer 1

A) $345,000

Explanation:

Total Value of services provided = 500*700

= $350,000

Common stock = 1000*5

= $5,000

Excess amount attributable to paid-in capital-excess of par

= $350,000 - $5,000

= $345,000

Therefore, The amount will Fink's paid-in capital-excess of par increase for this transaction is $345,000.